First Quarter Earnings Report
First Quarter Earnings
MARKET OVERVIEW 18
compared to the same period in 2009, the first increase since 2006. This, together with a greater outlook for leading indicators of future demand such as contract awards for residential and highway by George H. Reddin construction, suggests an improved outlook for the balance of 2010, with most of this improvement exGeorge H. Reddin is a pected in the second half of 2010. principal at FMI’s Investment Earnings for the peer group followed revenue for Banking practice. He can be the most part with a median decline in EBITDA reached at 919-785-9286 or of 15.5 percent when compared to the prior year at greddin@fminet.com. in 2009 (see Figure 2). Holcim, benefiting from its presence in emerging markets, showed a 28.6-percent increase in EBITDA, while the balance of the peer group showed decreases. Balance sheet management was emphasized over the last year as companies sought to refinance debt and raise capital. Significant increases in debt associated with major acquisitions during 2003-2007, Revenue Growth: 1st Quarter 2010 vs 1st Quarter 2009 coupled with a near collapse of the credit markets 20.0% in the latter half of 2008, 10.0% had these companies focused on their leverage. Fig0.0% ures 3 and 4 present total -10.0% debt/EBITDA (Figure 3) and EBITDA/interest ex-20.0% pense (Figure 4) coverage ratios at the end of the first -30.0% quarter in 2010 versus the -40.0% same period in 2009. Source: Capital IQ As shown, the results Figure 1 * CRH report is for the first two months of 2010. ** Texas Industries is for the quarter ended Feb. 28, 2010. are mixed. While improvements have been made EBITDA: 1st Quarter '09 vs 1st Quarter '10 on overall levels of debt 1,000 and liquidity, decreases in 800 600 EBITDA have resulted in 400 a mixed bag in the cover200 age ratios. We expect continued diligence to balance (200) sheet issues. The construction materials peer group saw an 1st Quarter 2009 1st Quarter 2010 Source: Capital IQ average increase of more
Is the worst behind us?
he construction materials peer group fared poorly in the first quarter of 2010 when compared to the first quarter of 2009. Revenues were down for all the companies except Holcim, which benefited from a more significant exposure to the growth in emerging markets. International-focused companies like Holcim and Heidelberg benefited from business activities in emerging markets, while companies concentrated in North America saw the most significant decreases in revenue. A rainy and cold first quarter also contributed to these poor results. Overall, the peer group had a median revenue decrease of just over 10 percent when compared to the same period in 2009 (see Figure 1). On the bright side, product shipments for Cemex and Vulcan increased in March and April when
Te ar xa ie sI tta nd us tri es **
*
g
m
de
at
H
La
M
G
C
ei
H
US$BN
Ea gl e
M ar ti
n
M
Martin Marietta
Texas Industries**
CRH*
Heidelberg
Holcim
Eagle Materials
Figure 2 * CRH has not reported for the first quarter of 2010. ** Texas Industries is for the quarter ended Feb. 28, 2010.
Granite
Cemex
Lafarge
Vulcan
Titan
Vu lca n
ls
em
lb
er
ol
ra
C
fa
Tit an
ex
RH
te
er
ni
rg
ia
ci
e